Context: Understanding Impact and Benefits of ERP
Lack of knowledge and awareness about any concept creates a mystery around it. Generating interest and engagement provides opportunities to break the barriers that are holding back awareness and knowledge. Creating experience around the concept and its application enables unraveling the complexities, raising awareness of its finer aspects and thereby developing a deeper comprehension, thus facilitating movement from mystery to mastery.
Most business colleges and universities use, case studies as a teaching supplement, to enable students to learn advanced concepts like ERP (enterprise resource planning) and its necessary place in an enterprise. Case studies or similar approaches for learning supplements, however, lack effectiveness. Applying experiential learning via gamification facilitates experiencing the complexities of the concept, helping participants to comprehend the concept far more deeply. Students are invited to participate and play different roles in the game. Engaging students in a game, enable them to experience near-real-world situations, including making choices and taking decisions, instead of imagining the situations and hypothesizing the concept and its complexities. Learning gained from such a direct and personal encounter with the concept is therefore far more effective.
I had undertaken an assignment to start a course on ERP for a postgraduate management institute. Most of the students did not have any exposure to working of an enterprise, and thus any expectations, for them to appreciate the importance of ERP for an enterprise were misplaced. I further realized that explaining ERP using conventional methods—lecture, audiovisuals, and case study—would be too slow, even disregarding their intrinsic limitations, such as audience misinterpretations of oral or visual explanations. I therefore designed a game that involved students in a simulated enterprise environment so that they could experience the situation both, with and without an ERP solution. The level of knowledge gained by students was later evaluated by a panel consisting of the CIO of an ERP user company and a senior IT professional. The panel members were thoroughly impressed by the depth of comprehension of the subject demonstrated by students, as it was much higher than that of similar students from other institutes, with whom they had met for similar assessments. They were most impressed to find that students had acquired deeper understanding of ERP in an extremely short period.
This is the premise of the game that will be explained in this chapter. The game introduces a fun element in experiencing how an ERP solution enables the enterprise to generate efficiency and effectiveness, thereby facilitating an accelerated comprehension of the concept.
The Aircraft Manufacturing Game is played by students in teams. Teams compete to generate the highest profit within the same set of situations and constraints. The game is designed to represent a real-world business environment in the most simplistic form possible and to facilitate experiencing the subtler aspects of ERP, including how it helps to generate efficiency and makes higher profitability more probable.
The competitive aspect triggers intensity and depth of the experience. Game elements aid in generating higher interest levels without stress (Figure 2-1). Real-world simulation facilitates comprehension of the subject—for instance, how ERP generates instant visibility of the impact of each transaction on profitability.
Figure 2-1. Dimensions of game-based approach
Here’s an overview of the game:
Buy paper (the paper represents raw material).
Convert the paper into paper aircraft (this represents the manufacturing process).
Sell these paper aircraft to customer.
The process to create a paper aircraft is shown in Figure 2-2.
Figure 2-2. How to create an aircraft from paper
Each team consists of five players, with one team member taking the lead and others performing specific roles as follows:
The leader represents the CEO of the company and is responsible for generating profits. The leader plans strategy; makes decisions about bank credit, raw material (i.e., paper) inventory, discounts for preferred buyers, and so on; and in general, instructs other team members.
Procurement is responsible for sourcing raw material (i.e., paper) as per guidance of the leader and passing it over to the Production team member.
Production is responsible for creating aircraft from paper and handing them over to the Sales team member.
Sales is responsible for selling aircraft to customer, primarily by engaging in negotiation and closing the deal by taking money and giving aircraft to buyer.
Finance is responsible for continuously recording money transactions with the bank, the paper seller, and the aircraft buyer for and calculating profit and keeping the leader informed about numbers.
Aircraft Manufacturing Company Game
Considering the complexity of the game, it is essential to demonstrate a typical business cycle before actual play. The demo cycle will help participants to play the game well and, more importantly, experience learning.
Note
Cycle = Complete set of multiple transactions within a quarter involving converting paper into aircraft and selling and earning profit.
Let us now examine the task-level details of the Aircraft Manufacturing Game, beginning with preparation and prerequisite material and continuing with its execution, including steps to consolidate learning after the game is finished. An overview of the entire activity is shown in Figure 2-3.
Figure 2-3. Aircraft Manufacturing Game process flow
Complete details of the activities in the process flow are described in detail in the following sections.
Activity
The following is a description of the business environment. The aircraft manufacturing company has one plant. It sources raw material from a single vendor and sells its product to a single airline. Manufacturing infrastructure and labor are limited. The company borrows funds from a single bank at a simple interest rate. Team plays as the company and generates profit by increasing the price or reducing the cost within one business cycle while announcing the quarterly balance sheet to stakeholders at the close of each quarter.
Players on both teams are instructed that they are start-ups and that they need to plan their strategy accordingly. Also, both teams will operate within identical business situations:
Bank interest rates in the initial business cycle and successive cycles are as follows:
Cycle 1: 3% up to 100,000 Mil USD and 2% for any amount above 100,000 Mil USD.
Cycles 2 & 3: 4% up to 100,000 Mil USD and 3% for any amount above 100,000 Mil USD.
Cycle 4: 3.5% up to 100,000 Mil USD and 2.5% for any amount above 100,000 Mil USD.
Cycle 5: 2.5% up to 100,000 Mil USD and 2% for any amount above 100,000 Mil USD.
Raw material vendor with the same price for paper supply per business cycle as follows:
Cycle 1: $10,000 per paper for the first 10 papers, $5,000 per paper for 10 to 20 papers, and $3,000 for 21 or more papers.
Cycle 2: $15,000 per paper for the first 10 papers, $10,000 per paper for 10 to 20 papers, and $7,000 for 21 or more papers.
Cycles 3 & 4: $20,000 per paper for first 10 papers, $15,000 per paper for 10 to 20 papers, and $10,000 for 21 or more papers.
Cycle 5: $9,000 per paper for first 10 papers, $7,000 per paper for 10 to 20 papers, and $5,000 for 21 or more papers.
Manpower costs will remain same for all business cycle with $500 per business cycle per person.
Manufacturing capability per person will remain constant: aircraft making will be fixed to 15 aircraft per minute (i.e., the maximum number of aircraft that can be manufactured per business cycle will be 75, and thus teams will be limited to 375 total for the five cycles).
The notional price of one aircraft is around $35,000; however, this can be changed through negotiation with buyer.
The maximum number of aircraft that the purchaser or airline can buy is 75.
The only difference between the two teams is that one team will get a whiteboard to use for continuous update of transactions and calculation of profitability posts each transaction, as shown in Figure 2-4.
Figure 2-4. Two teams playing Aircraft Manufacturing Game
A sample calculation for demonstrating how the profit would be calculated is illustrated in Figure 2-5.
Figure 2-5. Sample calculation sheet
After the teams are given the aforesaid business environment variables, it is explained to them that certain elements can be decided and changed by them as per their strategy:
Amount of money to be borrowed from time to time.
Number of team members.
Raw material (i.e., number of papers to be procured, procurement frequency).
Discounts or rebates to be given to airline/buyer for incentivizing aircraft sold.
Required Materials
Instruction and regulations sheet for each role holder in two sets for each game play.
Stack of 375 papers for each game play.
Individual worksheet for money borrowed/interest liability, money owed to supplier, money owed to people for work, money paid for raw material/finished product inventory, money earned through sale of aircraft after netting of the discount/rebates paid to the airline/buyer.
Whiteboard with the calculation sheet (refer Figure 2-5) in tabular form for continual calculation of profitability from transactions of purchase and sale.
Set of FAQ to respond to questions.
Means to record the activity over a video for replay during debrief.
Stopwatch for measuring and monitoring time and maintaining participation statistics.
Prizes and rewards that help promote the competition in form of a winner’s trophy, gifts, and tokens of appreciation across many categories. Recognizing every participant will support higher participation and ensure accomplishment of the intended objectives. While recognition by itself could be attractive enough, other prizes or rewards, limited in number to maintain a spirit of competition, should be even more attractive.
Once all the preparation is complete, execution of the game can begin.
Execution
All the participants are explained the context and rationale for the game: that is, how an enterprise engaged in sourcing material and adding value by transforming it, sells this value-added product at a profit.
A business cycle with profitability calculations is demonstrated to all the participants so as to establish the process of the game and initiate participants into the game.
You must ensure that the demonstration is detailed, including an explanation of the context of each of the activities and their relevance to the process of an enterprise as well as the impact on the outcome of the game.
Ten volunteers are invited to play the game, and then they form teams and identify leaders for the two teams.
Each of the teams has to complete the activity about 30 minutes. This includes the 2 minutes given for calculations at 5-minute intervals; in other words, processing of the balance sheet at each quarter is to be done within the time constraint. Teams perform five consecutive business cycles, with each cycle consisting of 5 minutes. At the end of each business cycle they get time for 2 minutes to calculate the profit made, which is added to their team score. After completion of the five cycles, the winner is announced on the basis of the cumulative score for the five cycles. The team objective is to make a higher profit than the competing team.
On the basis of the profits, the winner of the game is announced and participants are engaged in debrief through capturing their experience and learning on the whiteboard.
Once the game is over, observations from experience are collected and crystallized in learning in the debrief section.
Debrief
The learning gained through the experience, while playing the game, needs to be articulated and consolidated. Debrief is a process that aids in articulating the learning that students gained during the game that simulated the enterprise environment. Each student who played the game or watched the two teams play the game has experienced the situation and will be able to articulate learning about the differences between the teams’ performance and efficiency with and without the whiteboard that relates to an ERP solution.
The debrief process begins with asking the leader of the first team to share experience, especially after observing the advantage the second team had of regular updates and the direct visibility of the effect of each transaction on profitability by use of the whiteboard.
Subsequently, the leader of the second team shares learning about how their team was enabled by the whiteboard to generate profit, and how it could have been leveraged further to raise the score even higher.
The process is followed with asking each of the first team’s members, along with his or her counterpart on the second team, about their experiences, and the differences between the two are noted on a well-displayed whiteboard.
Students who were not part of either team will also have new observations and learnings, and these are similarly captured.
Key points are noted on a whiteboard after discussion and consensus, with the observer or student sharing the learning. The process of writing on the whiteboard also allows time for each student to reflect the uniqueness of his or her observations and share with the rest of the students, and also triggers others to reflect and share their learning (Figure 2-6). The process also reinforces the learning.
Figure 2-6. Instructor consolidating collective learning
After consolidation of the learning, it’s recommended to conduct a benefit assessment exercise, to track and monitor the gains from application of the gamification.
Benefit Assessment
The level of knowledge gained by participant can be evaluated through the following:
Written test, possibly with multiple-choice questions. The questions could begin with basic aspects and conclude with advanced aspects.
A competition on the subject with students from other institutes.
An assessment by an external panel from industry. The panel could consist of a senior professional from an ERP user company, a senior IT professional, and an internal student mentor of the institute.